Dior, Bon Mrache, Korvettes Among Firms Involved in the Collapse of the Willot Brothers' Empire

July 24 was a Black Friday for Jean-Pierre Willot, France's textile king. It was the day the police arrested him, searched his home and charged him with misuse of assets and falsifying company books. Jean-Pierre Willot is one of the four Willot brothers who headed the bankrupt Agache-Willot empire of textile factories and retail stores. The enterprise, with annual sales of U.S.$2 billion and around 45,000 employees, was placed under compulsory liquidation by French authorities in late June.

Soon after Jean-Pierre's arrest, his brother Antoine was also seized. Their passports were confiscated pending trial, and they were released on bail when they signed over all their personal belongings as guarantee for a $16 million French government loan to support their businesses for another two months.

Agache-Willot is the holding company for the four brothers, who are known as the "unacceptable face of French capitalism," according to the World Business Weekly, of the Financial Times. The shifty Willot quartet inherited a small bandage firm from their father in 1954, and then set about acquiring ailing textile manufacturing and distributing businesses. Chief' among these in size was Boussac-Saint-Freres (BSF), France's largest textile maker, a subsidiary of which is the Christian Dior couture house and designer label.

The brothers are notorious for operating all their businesses secretively, with decision-making kept firmly in their hands. Three days after the French Socialist Party's parliamentary election triumph in June, the brothers declared their largest firm, BSF, bankrupt-apparently hoping to force the government to provide financial aid to the firm in order to save the jobs of BSF's 22,000 workers. Unemployment benefits for those workers would cost an estimated $200 million. Instead, Industry Minister Pierre Dreyfus appointed an administrator over all the other Willot holdings as well as over the brothers' personal assets.

In 1979 the Willots bought the troubled U.S.-based Korvettes discount chain, which has proven a $65 million failure-but even Korvettes was not so costly as BSF, which was borrowing $50 million a year to stay in business until bankers stopped honoring the ' company's checks in June.

The essence of the Willot mismanagement and "indelicatesse," as Prime Minister Pierre Mauroy put it, was that the brothers used the profits from the viable elements of their operations, such as Dior, to finance relentless expansion, this at a time when France's textile industry was being eroded by foreign imports. (Textile imports to France have increased from 4107o to over 5007o of the market in the last three years alone.)

Now it will be up to the French government to salvage the former Willot empire, which will require reorganizing the nation's textile industry, including, international Dior license-holders.

The two brothers who were arrested-Jean-Pierre and Antoine-were both members of the board of Christian Dior, and since the Dior label has been promoted throughout the world as a symbol of expensive good taste and refinement, the news of the Willots' 'arrest is most ominous for the chic institution's reputation.

Dior's chairman took swift action to rectify the situation. Jean-Pierre and Antoine Willot resigned from the board in August and were replaced by businessman Anatole Temkine and former French ambassador to the U.S. Jacques Kosciusko-Morizet.

Commenting on the nomination of a diplomat to Dior's board, Jacques Rouet, chairman since the company's founding in 1946, explained: "Our prestige overseas must be revived after the Willot saga. A former diplomat seems the ideal candidate for the job. And the U.S. represents 36% of our annual sales."

Dior, like other "haute-couture" fashion-houses, makes little direct profits on its tailor-made fashions and "creations": a mere 2% of the 1980 sales. When the company was set up in 1946 by France's former textile king, Marcel Boussac, the chic clientele was estimated at a mere 12,000. Today, the figure has dwindled to around 3,000. But the label, which serves to sell the mass-produced shoes, bags, scarves and perfumes of the same name the world over, must continue to create new fashions each year in order to maintain prestige.

Jacques Rouet, and Christian Dior himself-who died in 1957-realized back in 1947 that profits were to be made on accessories by extending the international dimension of the company. Direct sales made in France have been falling each ' year in contrast with those made by licensees the world over. In 1980, 86% of Dior's sales came from goods made and sold overseas, through 160 license agreements. Apart from the United States' 36% market share, 33% of sales are in Europe and 22% in Japan. The remainder are in Central and South America.

With the Willot "gang of four" gone from the scene, the current management hopes to be able to reinvest in order to develop direct sales in the home market. "All our profits were drained off during the last 10 years by the Willots in order to bolster their weak and ailing ventures," says Mr. Rouet.

Meanwhile tens of thousands of workers-at BSF, Dior, Belgium's Galeries Anspach retail chain, and Paris's chic Au Bon Marche department store-wait anxiously while the government searches for solutions. One of these is the immediate sale of the few sound companies such as Christian Dior, to help finance restructuring of the other businesses. French and foreign companies are currently making offers; the Dior management and workers committee are rooting for a solid French buyer willing to re-invest in Dior's future; and a prime prospect currently is the Moet-Hennessy group, which already owns the Dior trademark for perfumes and cosmetics.

- Report by Clare Rosemberg, who is a freelance writer based in Paris.